An employee performance evaluation / review or appraisal is a process—often combining both written and oral elements—whereby management evaluates and provides feedback on employee job performance, including steps to improve or redirect activities as needed. Documenting performance provides a basis for pay increases and promotions.
Performance evaluations are important not just for ensuring the successful operation of a business or organization, but also for supporting employee motivation and career planning. An effective employee performance review helps to align individual goals with those of the organization, provides clear communication around work responsibilities and objectives, identifies training needs, and encourages positive relationships between employees and management.
Performance reviews are also tied to business planning since they often coincide with pay changes and promotions. While annual performance reviews are typical, reviews may occur throughout the year for various reasons, from assessing a particular assignment or skill to simply checking in with employees on a more regular basis. Conducting informal, monthly reviews can help to keep management informed, address issues as they arise, and foster positive relationships. Having more frequent reviews takes some of the pressure off of the formal annual review and promotes a culture that values feedback and the review process.
Employee evaluation form helps an employer or business gather necessary information to properly review or evaluate employee job performance.
Importance/Goals of Performance Evaluation/Review/Appraisal
While the term performance appraisal has meaning for most small business owners, it might be helpful to consider the goals of an appraisal system. They are as follows:
- To improve the company's productivity
- To make informed personnel decisions regarding promotion, job changes, and termination
- To identify what is required to perform a job (goals and responsibilities of the job)
- To assess an employee's performance against these goals
- To work to improve the employee's performance by naming specific areas for improvement, developing a plan aimed at improving these areas, supporting the employee's efforts at improvement via feedback and assistance, and ensuring the employee's involvement and commitment to improving his or her performance.
Developing an Employee Evaluation System
In developing an appraisal system for a small business, an entrepreneur needs to consider the following:
- Size of staff
- Employees on an alternative work schedule
- Goals of company and desired employee behaviors to help achieve goals
- Measuring performance/work
- Pay increases and promotions
- Communication of appraisal system and individual performance
- Performance planning
TYPES OF APPRAISALS AND ASSESSMENT TERMS
In a traditional appraisal, a manager sits down with an employee and discusses performance for the previous performance period, usually a single year. The discussion is based on the manager's observations of the employee's abilities and performance of tasks as noted in a job description. The performance is rated, with the ratings tied to salary percentage increases. However, as David Antonioni notes in Compensation & Benefits, "The traditional merit raise process grants even poor performers an automatic cost of living increase, thereby creating perceived inequity'¦. In addition, most traditional performance appraisal forms use too many rating categories and distribute ratings using a forced-distribution format." Antonioni suggests the appraisal form use just three rating categories—outstanding, fully competent, and unsatisfac-tory—as most managers can assess their best and worst employees, with the rest falling in between.
Somewhat self-explanatory, the self-appraisal is used in the performance appraisal process to encourage staff members to take responsibility for their own performance by assessing their own achievements or failures and promoting self-management of development goals. It also prepares employees to discuss these points with their manager. It may be used in conjunction with or as a part of other appraisal processes, but does not substitute for an assessment of the employee's performance by a manager.
In an employee-initiated review system, employees are informed that they can ask for a review from their manager. This type of on-demand appraisal is not meant to replace a conventional review process. Rather, it can be used to promote an attitude of self-management among workers. Adherents to this type of review process contend that it promotes regular communication between staff and managers. Detractors, though, note that it is dependent on the employees' initiative, making it a less than ideal alternative for some workers with quiet, retiring personalities or confidence issues.
360-degree feedback in the performance appraisal process refers to feedback on an employee's performance being provided by the manager, different people or departments an employee interacts with (peer evaluation), external customers, and the employee himself. This type of feedback includes employee-generated feedback on management performance (also known as upward appraisals). As a company grows in size, a small business owner should consider using 360-degree feedback to appraise employees. Communication in a business of ten people varies wildly from that of a company of 100 persons and 360-degree feedback ensures that an employee's performance is observed by those who work most closely with him. Small business owners or managers can either include the feedback in the performance review or choose to provide it informally for development purposes.
How to Write a Good Employee Performance Review
As a manager or employee, you need to give your employees constructive feedback to make sure the business is operating efficiently. Periodic performance reviews give you the opportunity to praise employees for what they've done well, correct what they're doing wrong, and discuss your vision for their growth and future at the company.
Make it comprehensive
A good written performance review covers all the bases of an employee's work. It shouldn't be all positive or all negative — a healthy balance of both is necessary to help your team members evolve in their roles.
Recap regular, informal feedback
Formal review periods shouldn't be the only times employees receive feedback about their performance. There's no need to call a meeting for every individual issue that comes up, but there also shouldn't be any surprises when workers read their reviews from the boss.
Give honest, constructive criticism
It's never easy to tell an employee what he or she needs to do to improve, but giving constructive criticism about your workers' performance is an important part of the review process. Be as clear and direct as possible about any shortcomings and mistakes, but also take the time to provide solutions to those problems.
Encourage discussion about the review
Most managers agree that it's frustrating when an employee has nothing to say in response to his or her performance evaluation. Push your employees to give you feedback on the issues you raised.
End on a positive note
Always end performance reviews on a positive note. Encouraging your employees and letting them know you appreciate what they do for the company will give an added boost to a primarily good review, or lift your employee's spirits after a somewhat negative evaluation.
Download Samples of Employee Evaluation Form Here